Most people don’t have enough money to purchase a car with cash. As such, they look to a car finance agreement to help them gain access to a vehicle without breaking their bank. Car finance contracts involve principal, or the cash sales price of the car, interest, and the length of the agreement.
Dealerships make money by charging interest over periods of time, which is their incentive for loaning the vehicle using a car finance agreement. We won’t touch on the intricacies of how car finance deals are calculated in this article. However, we will go over several tips, tricks, and strategies for getting a quality vehicle at the lowest possible price. Let’s get started.
This strategy works for every good or service, but people that shop around at as many dealerships as possible will find more competitive car finance offers. You should obtain a written estimate for similar models of vehicles across all dealerships you visit and present them to other dealerships. People negotiate during car sales every minute of every day, often with untrue information. Bringing along official, written estimates will help prove your case that you may be able to get a better car finance agreement at another vendor. This will help lower prices no matter where you go.
Stay in tune with your credit score
Credit scores are used by landlords, insurance agencies, and car dealerships to reasonably assess financial risk with particular customers. Dealerships offer car finance contracts with unfavorable terms to those with low credit scores. If you have a low credit score, search online for ways that you can raise it. Wait a few months before visiting dealerships, as your hopefully-higher credit score will help you earn favorable contract terms. Find more about car finance www.strattonfinance.com.au/car-finance/options/car-loan.aspx
Get help from a financially-stable cosigner
If you’re lucky enough to have someone cosign on a car loan, they agree to assume payments for your vehicle if you aren’t able to. Because this is a substantial obligation to take on, most people besides family members won’t help you cosign, especially on a pricy vehicle. People who can find a cosigner with favorable credit history and in stable financial position will be able to lower their interest payments.
Aim for loans that don’t take long to pay off
Loans with short terms will help reduce interest payments. Pay as much as you can each month to prevent interest accumulating on high principal balances. Car dealerships love to loan out vehicles for long periods of time, and some may not be willing to loan vehicles for short terms. Shop around and find a dealership that will loan a car for a year or two, given you’ll actually be able to pay it.
Place a down payment on your financed vehicle
People that put down payments on loaned vehicles may be able to secure lower interest than not doing so. If you currently don’t have much spare money, try to save up for a few months so you’re able to place a significant down payment on a vehicle.